August 21, 2008

Palm Launches Treo Pro To Compete For Business Customers

Palm Inc. unveiled its new Microsoft-run Treo Pro smartphone this week in a move intended to improve its competitive positioning against rivals such as RIM's BlackBerry.

The company said the new device would be sold by Vodafone Group Plc in Europe in September, and by Telstra in Australia.

Palm does not currently have any carrier agreements to sell the phone in the United States, but said demand is increasing among enterprise customers for unlocked phones that can work on any network.

But without carrier subsidies, the $549 Treo Pro's price tag is considerably high, according to CL King analyst Lawrence Harris, an analyst with CL King, that

"Given the pricing and lack of carrier sponsorship in the U.S., we believe initial sales of the Treo Pro will be limited," Harris told Reuters.

Harris said that just 21 percent of Palm's revenue was generated from international sales during fiscal year 2008.

The Treo Pro is Palm's second phone with Wi-Fi technology, enabling the phone to provide high-speed Web browsing even in areas of weak cell phone reception. Treo Pro also incorporates Global Positioning System (GPS) technology that supports features such as directions.

Palm said the use of Microsoft's Windows Mobile 6.1 software would help it compete with rivals such as RIM's BlackBerry Bold, a new smartphone that is being launched in Canada this week, and is expected to hit the U.S. market later this year.

"We've chosen to partner with Microsoft to compete effectively with RIM," said Brodie Keast, Palm senior vice president for marketing, in an interview with Reuters.

But Brodie believes the smartphone market is big enough for both companies to grow.

"Even with the growth in this market, 90 percent of the market doesn't have a smartphone. It doesn't make sense to fight over the 10 percent," he said.

"We want to reach out to people who don't have a smartphone, not people who already love RIM."

Keast said Palm would likely include Wi-Fi in other devices to be launched in the future in order to meet growing demand for high-speed connections in areas where cell phone reception is weak, and to accommodate users wish to download large amounts of data.

"Going forward for premium, fully featured devices, Wi-Fi is a requirement," he said.

Keast said the company is on track to launch a new phone software platform for the consumer market next year. The new phone, he said, would be something along the lines of an Apple Inc. iPhone.

Keast said he does not view the new Treo Pro as a direct competitor to the iPhone.

Shares of Palm were largely unchanged in midday trading on Nasdaq Thursday.